Deep Sea Mining Update, part one

Submitted by admin on Tue, 07/24/2018 - 10:39

One of the most disconcerting proposals for exploitation of ocean resources in the deep sea mining — access through extraction technology to material underwater and heretofore beyond the grasp of the world’s mining industry. One part of public opposition to the possibility is the demonstrated outcome on mining on land — the vast pits, the scarified landscape, the decapitated mountain-tops, the residual consequence, corrupted watershed, and chemical deposits that often make such sites designated “wastelands,” sometimes qualifying for clean-up by legislated “super-funds” which may or may not be adequate to the problem, may or may not be even available. It does not take much imagination to visualize such destruction underwater, off-shore where surely additional similar deposits abound.

For me, one the most surprising targets for ocean mining is sand, something one may assume to be ubiquitous on land. Consider beaches for example, as an intervening supply. But one can also understand the prohibitive outcry should large earth moving equipment suddenly one day arrive to scoop up the recreational potential of our coastal beaches.

Far better to find a place far, far away from an inquiring public — Papua New Guinea for example — where mining the sea floor can be undertaken at scale with no important impact of protesting society — the local, poor, dependent villagers of that remote place without significance or power. This is, of course, the strategy of Nautilus Minerals, the sponsors of Solwara 1, a deep ocean mining experiment located at a 1600 meter depth in the Bismarck Sea, approximately 25 km from the coastline of New Ireland Province, 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain, all within the territorial waters of, you guessed it, Papua New Guinea.

The project has attracted enormous international interest. The principal, Nautilus, a Canadian company, sought numerous investors to include Anglo-American, a global extraction corporation, with successful enterprise in the recovery of diamonds, copper, platinum, coal, iron, manganese, and nickel. Other investors include Metalloinvest Holding, a Russian mining company, and MB Holdings from Oman, providing bridge loans that, according to a recent press report, as of May 15, 2018, amount to $11.25 billion at 8% interest payable bi-annually, one year maturity, plus 48,324,740 share purchase warrants issued as further partial consideration. According to a press account on June 25, 2018, “USM Holdings, the ultimate parent holding company of Metalloinvest Holding, registered in Cyprus, is controlled by Russian billionaires Alisher Usmanov (49%) and Vladimir Skoch (30%). In the April 6, 2018 sanctions imposed by the United States, Vladimir Skoch’s son was one of the seven Russian tycoons sanctioned,…” (learn more about the 7 Russians sanctioned) Also, in the past month, Anglo-American divested its ownership share. Not information conducive to public confidence.

At the outset, the project met, of course, with immediate growing opposition from national and international environmental groups such as Mining Watch Canada, the Mining Justice Alliance, and the Deep Sea Mining Campaign, as well as determined internal New Guinean testimony at hearings and legal actions through the New-Ireland community-based Solwara Warriors. Andy Whitmore of the Deep Sea Mining Campaign stressed, “Anglo’s decision to divest, on top of Nautilus’s myriad problems, proves the company is running out of both credit and credibility. It is not just the company that is sinking, but the project — and the concept of deep sea mining itself — that is going down with it.”

If that is the case, the defeat is both spectacular and welcome.

Let’s ask some questions about this situation:

First, why is such a project necessary at all? Why would government support economic development that is so destructive to other aspects of the local and national economy? Given any meaningful due diligence, how could government permit such risk in partnership with such risky investors? Second, what is the financial rationale for such investment? Serious shareholder value was placed as a long odds bet on hypothetical success? Russian oligarchs may not care, but presumably Canadian investors and financial oversight and government agencies do. The situation is rife with potential for fraud. Third, what will we learn from this fiasco? Will it be similar to Shell Oil’s multi-billion dollar lost in drilling for Arctic oil — just another inconsequential footnote on the great global balance sheet where profit and loss by natural resource exploitation is calculated and accounted for as a meaningless number? Finally, what happens next? Another profound, and unanswered challenge for the sustainable ocean.

W2O first reported on the Papua New Guinea Solwara 1 project back in July of 2017. That episode of World Ocean Radio is available here.